Reports are surfacing throughout the area that severe labor shortages are beginning to appear in new housing projects. After many years of declining new construction, much of the former local labor has either taken other employment or left the area.
With sellers reluctant to list their homes and buyers needing immediate housing, the new construction market has been the natural outlet. Combined with limited inventory on the existing market, demand (and prices) for new homes is beginning to skyrocket. Some of the additional profit will be sacrificed to higher labor costs, although reports are that prices are rising significantly faster than labor costs.
Consider the impact on existing homes. Increased demand for new construction, leading to higher prices, will combine with the limited existing stock for sale, to put even greater pressure on prices than we have seen the past few months. It may be a great time to consider listing, but don’t list too low. There is a bright emerald green light for sellers to demand more for their home now, but let’s not ignore the fact that this could change down the road: 1) interest rates will go higher; 2) if new construction becomes a boomlet, the added supply will cap the amount of price increases; 3) Federal budget cuts could become more real than we currently fear, slowing income growth in the area.
The direction for prices in the first half of 2013 remains strongly higher. We will revisit the likelihood of this changing at a future date. But for anyone looking to list now, call for a comprehensive analysis of your home and neighborhood. There will likely be strong demand for your home.